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Court of Appeals Rules Against Asheville in Water Law Challenge

By Kirk Ross / Carolina Public Press

The battle over who controls Asheville’s water system will move up the legal ladder again as city officials say they’ll ask the North Carolina Supreme Court to take up the case after the state Court of Appeals reversed a lower-court ruling that favored the city.

The Court of Appeals ruling, released Tuesday and found in full below, reversed trial court Judge Howard Manning’s 2014 decision that blocked creation of a regional authority to run a combined water and sewer system.

The judge held that the N.C. General Assembly overstepped its constitutional authority when it attempted to put control of the city’s water system under a different state-created entity.

Although crafted as a statewide measure, Manning said the law was in effect a local bill, which would prevent it from crossing into certain constitutionally excluded areas, such as public health and safety and non-navigable streams.

In its unanimous 26-page ruling, the Court of Appeals rejected Manning’s assessment that the law was unconstitutional in three separate areas, citing legal precedents, including past Asheville water system lawsuits, that grant the legislature wide latitude to organize and regulate the power of municipalities and other political subdivisions.

“We reverse the court’s conclusions regarding the legislation’s constitutionality and its injunction and remand the matter for further proceedings consistent with this opinion,” the decision reads.

Constitutionality in question

The opinion said courts are only allowed to strike down laws as unconstitutional if the violation is “plain and clear” and that the city had failed to prove it was in this case.

The court sidestepped the question of whether the legislation was a local bill, but found that it did not cross into the regulated areas that are off limits for local bills as the city’s legal team had successfully argued at trial.

The ruling said the exclusions for health and safety and non-navigable streams would only apply if legislation specifically stated its intent to address those issues or if the measure was explicitly designed for that purpose.

In this case, the justices found that the connection to such issues was secondary and indirect, preventing the law from going beyond what the Constitution allows.

The court also rejected an argument by the city that the law was unconstitutional because did not have a rational basis.

“It is not our role to second-guess ‘the wisdom [or] expediency’ of the Transfer Provision, as long as there is some rational basis in that provision to accomplish some valid public purpose,” the decision reads.

The court additionally reversed Manning’s ruling that the transfer of the water system would result in an unjust taking without compensation.


Asheville Mayor Esther Manheimer (front left) and City Councilman Marc Hunt (front right) leave Wake County Superior Court following a 2014 hearing on the future ownership of the city’s municipal water system. File photo by Kirk Ross / Carolina Public Press
Asheville Mayor Esther Manheimer (front left) and City Councilman Marc Hunt (front right) leave Wake County Superior Court following a 2014 hearing on the future ownership of the city’s municipal water system. File photo by Kirk Ross / Carolina Public Press

Asheville Mayor Esther Manheimer said she expects the city council to approve a decision to appeal the ruling at its meeting next Tuesday. She said the decision represented a complete reversal of the city’s earlier victory.

“This is a devastating ruling not just for the people of Asheville, but for the people of North Carolina,” she said.

If it stands, she said, it means that cities and towns can have investments in public utilities and other infrastructure transferred by the legislature without any compensation. She said the water system transfer would involve strategic assets Asheville built up including its reservoir, dam and land acquired for watershed protection

“It’s not just the pipes in the ground,” she said. The reaction from residents, she said, has been vocal. “There is a lot of outrage that Raleigh can just take a local asset.”

Her concerns about the broader repercussions of Tuesday’s ruling were echoed by the North Carolina League of Municipalities, which had filed an amicus brief in the case.

League spokesman Scott Mooneyham said he could not comment in detail on the ruling but that his organization is disappointed and disagreed with it.

He said the League files few amicus briefs and obviously believed this was a case in which important statewide issues were at stake.

The mayor also expressed concern about potentially unfair representation for the city if the measure is allowed to go forward.

Under the legislation, she noted, Asheville would fill only three out of 15 seats on a new water and sewer authority, the same number as Henderson County, which has a fraction of the amount of customers.

Proponents of the transfer said the ruling vindicates the General Assembly’s actions.

In a joint statement released Tuesday, Henderson County Republican legislators Rep. Chuck McGrady and Sen. Tom Apodaca praised the court’s action.

“The legislature created the regional water and sewer authority following decades of well-documented disputes involving water and sewer systems,” the statement read.

“The legislature decided that a regional solution for public water and sewer for large public systems was the best way to provide the highest quality water and sewer services.

“We are particularly pleased that the court noted the long contentious history with customers residing outside of Asheville’s city limits and that the transfer of the Asheville Water System might provide better governance for the system.

“One of our primary interests in this legislation was to establish a water and sewer district governed by a local entity whose representatives are selected from all areas served by the system, as opposed to being governed by Asheville’s city council.”

McGrady and Apodaca also gave a nod to former Buncombe County representatives Nathan Ramsey and Tim Moffitt, who along with McGrady championed the bill in the House.

The two Buncombe Republicans were defeated for re-election in 2014 in part because of the water issue.

No deal in sight

Both sides said it was likely that the legal process would continue and that it was unlikely that the ruling would lead to talks on how to resolve the issue without further litigation.

In a response to questions from Carolina Public Press, McGrady said there have been no discussions on a negotiated settlement and he did not see what the basis would be for one.

Manheimer said that two years ago there had been talks on starting negotiations urged in part by Ramsey and city officials, but that the discussions did not resulted in any formal process for resolving the dispute.

She said she expects that in addition to appealing the ruling, the city will ask that the injunction preventing the law from taking effect be put back in place during the appeals process.

Click here to review ruling opinion.